Thu, April 25, 2024

Simon Says: Business earnings take a hit post-Covid

The Centers for Disease Control and Prevention (CDC) documents that Black and Hispanic persons are up to twice as likely to need hospitalization when contracting Covid-19 than white persons. The likelihood of death is over 1.5 times as high as white persons. Recent research by Robert Fairlee of the University of California Los Angeles has identified racial and ethnic disparities in business earnings.

Pandemic-induced losses to businesses in 2020 were 16-19 percent for all business owners. However, Black business owners suffered a larger negative impact of 12-14 percent compared to white business owners. Asian and Latinx business owners also did worse than their white counterparts. The good news is that Black and Latinx business earnings largely returned to pre-pandemic levels in 2021. However, Asian business earnings did not.

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What explains these disparities? Some can be explained by the type of business. For example, Latinx business owners are over-represented in construction, Black owners in transportation, and Asian owners in retail, leisure, and hospitality. All industries that experienced more risk during the pandemic. The lack of rebound for Asian owners may be the result of their exposure to retail and leisure and hospitality, the two sectors that suffered the most, but it may also reflect discrimination. Interestingly, Fairlee finds the differences are not due to state-level COVID policies such as mask mandates, social distancing, or the Payroll Protection Program.

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